Author
Topic: CHTR - Charter Communications (Read 185669 times)

I agree convergence and consolidation between wireline and wireless is the most likely path going forward. Verizon has already a dense fiber network in the Northeast and ATT in CA, some areas in the Midwest and South, but each operator needs to cover most of the US to give the consumer the best experience.

It seems that in the mid term future, wireless and fiber will start to supplement and compete with each other.

Imo, wireless and wireline will consolidate on valuations favorable to cable based on Zig-Vod merger and the various wireless companies looking at Chtr assets. Things could change so not a time for overconfidence but its no secret the wireline currently has the advantage and Malone is the last person that will allow that "advantage value" to be transferred without being compensated. In fact, one of my worries is that he wont take a fair price when offered which could come back to bite later. I would have taken 540, (assuming currency was decent, or even if lots of it was cash) because that 540 NOW in my hands is worth a good bit more in 3-4 years. By turning it down now (not saying that he did) you must be very confident of 700-800 or more in 3-4 years, again assuming currency was solid.

Imo, wireless and wireline will consolidate on valuations favorable to cable based on Zig-Vod merger and the various wireless companies looking at Chtr assets. Things could change so not a time for overconfidence but its no secret the wireline currently has the advantage and Malone is the last person that will allow that "advantage value" to be transferred without being compensated. In fact, one of my worries is that he wont take a fair price when offered which could come back to bite later. I would have taken 540, (assuming currency was decent, or even if lots of it was cash) because that 540 NOW in my hands is worth a good bit more in 3-4 years. By turning it down now (not saying that he did) you must be very confident of 700-800 or more in 3-4 years, again assuming currency was solid.

Malone mentioned this in interview with Faber about the offer (which I don't think was confirmed as 540, but as "something with a 5 in front" or something like that), and Malone basically said "I didn't see a check for that amount, show me the check". Meaning that he didn't want to swap CHTR stock for Softbank stock or whatever and be stuck with it with no control, repeating his AT&T mistake.

In the interview, it sounded to me as if part of the offer was in Sprint shares and Son wanted to value those shares significantly above their market value for the deal (because he considered them undervalued). That's obviously a far more dubious proposition than receiving $540 in cash.

I hear this line a lot from Malone and MIke Fries...combining a wireline network and a wireless network has huge synergies. Why does it have huge synergies? I get the churn reduction argument. But from a pure cost synergy perspective?

I agree with both of you, I saw the interview. But whats your thoughts on first part of my post?

It seems to be the direction of things, but who knows how it'll play out... What matters most is that CHTR doesn't need to merge with anyone to get to quad play, and 80% of the bits going through phones are already going through its wifi, not through cell towers, so it's easier for them to absorb that extra capacity than for the wireless players to try to duplicate the capacity of cable.

I hear this line a lot from Malone and MIke Fries...combining a wireline network and a wireless network has huge synergies. Why does it have huge synergies? I get the churn reduction argument. But from a pure cost synergy perspective?

As you mentioned, reducing churn has big benefits, but there are also synergies when it comes to the backhaul capacity, the billing and customer service systems, etc.

Imagine a cable network and a wireless company side by side, operating independently. If you made a venn diagram of everything they need to operate, there'd be a fair bit over overlap. That's where the synergies would come from.

But cable is a better business than wireless, so it all depends at what cost you can make it happen. So far CHTR seems to be going the MVNO route, which reduces risk.

Yes Liberty Global commentary on VOD/Ziggo JV was that the two biggest benefits were higher NPS and lower churn. The cost synergies were 1/4 IT savings, 1/4 redundancies and 1/2 included marketing + sales and termination of rented fibre. I think they discussed this on the Liberty Global Q3 2017 call.

Perhaps another dumb question, but why would someone like VZ willing to play game with the cable guys by letting them run a MVNO on its network? Is it due to regulatory requirement that they need to open up their network? Otherwise, I don't see it beneficial to cultivate a potential competitor for a little incremental revenue.